Etam group's net income affected by negative China results

Though revenue in 2016 was altogether stable at €1.292 billion, French fashion group Etam has reported mixed annual results, notably affected by a downturn in its Chinese business. The Asian country now accounts for just under 30% of Etam's revenue, and its performance has given a negative twist to the group's financial indicators, which are nevertheless fairly satisfactory from a European and French perspective.

Spring/Summer 2017 collection - EtamIn the last fiscal year, Etam's EBITDA grew in fact by 5.6%, rising from €95.4 million to €100.7 million. Current operating income has however declined: it is on the right track in Europe, growing 14.3% over 2015 to reach €68.3 million, but it was badly hit in China, where current operating income suffered a €19.4 million loss, compounding a €7.4 million one last year.

Etam's consolidated net income eventually added up to €18.2 million, compared to €23.9 million in 2015 though, and gross margin too has posted a slight shortfall, decreasing from 58.7% to 58.3%.

Etam has also published its first quarter 2017 results, and the new fiscal year has started in a troubled fashion: revenue is estimated at €324.6 million, down 7% compared to the same period last year. The European and French businesses are growing in net terms (respectively +2.1% and +1.5%) but comparable sales have slumped in both cases (-2.8% and -3.2%).

Specifically, the Etam and Undiz brands together grew by 3.2% in Europe (but comp sales were down 2.3%), while sales for 1.2.3 fell by 2.6% in the first quarter, with comp sales down 4.9%. These mixed results have been explained by the group as being a combination of "disappointing" end-of-season winter sales and a positive performance by the new collections. The latter may enable Etam to improve in the second quarter, at least in Europe, but in China the first quarter has confirmed, indeed worsened, the downward trend.

Etam's Chinese revenue in the first three months of the year reached €93 million, equivalent to a shortfall of 23.9%, or -21.5% in comparable retail area terms and at constant exchange rates.